T.C. Memo. 2011-218
UNITED STATES TAX COURT
CHRISTOPHER AMES BEACH, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4981-10. Filed September 7, 2011.
Christopher Ames Beach, pro se.
Meredith L. Stuart and Audrey M. Morris, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
KROUPA, Judge: This case arises from a stand-alone petition
for relief from joint and several liability under section 60151
and relates to a deficiency notice issued by respondent to
1
All section references are to the Internal Revenue Code of
1986, as amended, and all Rule references are to the Tax Court
Rules of Practice and Procedure, unless otherwise indicated.
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petitioner and his former wife for 2004. The deficiency arose
from a claimed casualty loss and expenses reported on Schedule E,
Supplemental Income and Loss, attributable solely to separate
property of petitioner, specifically two rental properties. The
issue for decision is whether petitioner is barred from obtaining
any relief from joint and several liability under section
6015(g)(2). We hold he is barred from obtaining relief from
joint and several liability.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. We
incorporate the stipulation of facts and the accompanying
exhibits by this reference.
Petitioner and his former wife, Leslie A. Beach (Mrs.
Beach), were married in 1997 and were divorced in 2005. They
filed a joint return for 2004 although they were separated at the
time of filing. That return was later examined and a deficiency
notice was issued. Petitioner filed a petition with this Court
at docket No. 27187-07S in response to the deficiency notice.
Mrs. Beach was not a party to the deficiency case.
During that litigation, Appeals Officer Janosek (AO Janosek)
met solely with petitioner regarding possible resolution of the
deficiency case for 2004, as the examination related to
petitioner’s separately owned rental properties. AO Janosek
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accepted the documentation petitioner provided substantiating in
part amounts claimed for 2004.
AO Janosek mailed a decision document to petitioner for
docket No. 27187-07S conceding a part of the deficiency but
sustaining disallowance of a number of the Schedule E expenses
and the casualty loss for lack of substantiation. The decision
document reflected a proposal for petitioner to stipulate a
$2,539 deficiency and a $508 accuracy-related penalty.
Petitioner agreed with AO Janosek’s proposal and signed the
decision document at docket No. 27187-07S, returning it to AO
Janosek. The decision document at docket No. 27187-07S was
entered by the Court on August 21, 2008.
Mrs. Beach filed a request for innocent spouse relief in May
2008, approximately three months before the decision was entered.
The relief request was also assigned to AO Janosek, who sent a
letter to petitioner informing him that Mrs. Beach was seeking
innocent spouse relief. Petitioner contested Mrs. Beach’s
request for relief. Petitioner again met with AO Janosek to
discuss Mrs. Beach’s relief request. AO Janosek determined,
after meeting with Mrs. Beach and petitioner, that Mrs. Beach
qualified for innocent spouse relief under section 6015(b) and
(c).
Petitioner attempted to contest again that Mrs. Beach
qualified by filing his own request for innocent spouse relief.
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He submitted his own questionnaire as a requesting spouse for
2004. Mrs. Beach submitted a questionnaire for a nonrequesting
spouse regarding petitioner’s request asserting that the
deficiency was entirely attributable to petitioner’s separate
property. Respondent issued a Final Appeals Determination letter
to petitioner denying his request for innocent spouse relief for
2004.
Petitioner filed a petition disputing the Appeals
determination that he did not qualify for innocent spouse relief
for 2004 under section 6015(b), (c) or (f).
OPINION
Petitioner seeks to be relieved from joint and several
liability for 2004. The deficiency petitioner seeks to avoid
arises from disallowed Schedule E expenses/deductions and a
casualty loss reported on Schedule A, Itemized Deductions, from
rental properties that were petitioner’s separate properties.
Respondent argues that res judicata bars petitioner’s claim
for relief. Res judicata requires that when a court of competent
jurisdiction enters a final judgment on the merits of a cause of
action, the parties to the action are bound by that decision as
to all matters that were or could have been litigated and decided
in the proceedings. Commissioner v. Sunnen, 333 U.S. 591 (1948).
The doctrine promotes judicial economy by precluding repetitious
lawsuits. Gustafson v. Commissioner, 97 T.C. 85, 91 (1991).
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Federal income taxes are determined annually with each year a
separate cause of action. Res judicata is applied to bar
subsequent proceedings involving the same tax year. Commissioner
v. Sunnen, supra at 597-598.
Res judicata would generally bar a party to a prior
proceeding for the same tax year from seeking relief from joint
and several liability regardless of whether the claim had been
raised in the prior proceeding. Vetrano v. Commissioner, 116
T.C. 272, 280 (2001). Petitioner now brings this action to seek
relief under section 6015 for 2004 after resolving the deficiency
action for 2004. Accordingly, petitioner’s claim for relief
under section 6015 would be barred by the common law doctrine of
res judicata.
The common law doctrine of res judicata, however, is limited
by section 6015(g)(2). Res judicata bars a taxpayer from
requesting relief from joint and several liability only if (1)
such relief was an issue in the prior proceeding, or (2) the
Court decides that the taxpayer participated meaningfully in the
prior proceeding. Sec. 6015(g)(2); see Deihl v. Commissioner,
134 T.C. 156, 161 (2010); Vetrano v. Commissioner, supra at 278;
sec. 1.6015-1(e), Income Tax Regs. Put more simply, a taxpayer
that participated meaningfully in a prior proceeding is barred
from electing relief under section 6015 for the same taxable year
after the decision of the Court has become final. See Vetrano v.
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Commissioner, supra at 278. Accordingly, petitioner will be
barred from electing relief under section 6015 if he participated
meaningfully in the prior proceeding. We now turn our attention
to this issue.
Petitioner bears the burden of proving that he did not
participate meaningfully in the prior proceeding. See Deihl v.
Commissioner, supra at 162. Petitioner failed to present any
legal arguments or briefs to prove by a preponderance of the
evidence that he did not participate meaningfully in the prior
proceeding.
Respondent contends that petitioner did in fact participate
meaningfully in the prior proceeding. We agree. We have
previously indicated that signing court documents, participating
in settlement negotiations, exercising exclusive control over the
handling of a proceeding, and having the opportunity to raise an
innocent spouse claim are all probative of meaningful
participation under section 6015(g)(2). See Deihl v.
Commissioner, supra at 162; Thurner v. Commissioner, 121 T.C. 43,
53 (2003); Huynh v. Commissioner, T.C. Memo. 2006-180, affd. 276
Fed. Appx. 634 (9th Cir. 2008).
It is difficult for us to fathom what participating
meaningfully would mean if petitioner did not do it in the prior
proceeding. Petitioner was the sole party and therefore
exercised exclusive control over the handling of the prior
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proceeding. He was the one who provided the documents to AO
Janosek in his consideration of the return for 2004, the same
year at issue here. He provided whatever substantiation was
available for the Schedule E expenses. He negotiated a
settlement with AO Janosek regarding the casualty loss deduction
and Schedule E expenses and signed the decision document at
docket No. 27187-07S. Moreover, he could have raised the issue
of relief under section 6015 but failed to do so.
We find petitioner participated meaningfully in the prior
proceeding within the meaning of section 6015(g)(2). We hold
therefore that petitioner is barred under section 6015(g)(2) from
obtaining relief from joint and several liability for 2004 under
section 6015.
We have considered all arguments the parties made in
reaching our holdings, and, to the extent not mentioned, we find
them to be irrelevant or without merit.
To reflect the foregoing,
Decision will be entered for
respondent.